Kurlon Ltd.

Kurlon Ltd. Team Marketing Ashish (29041) Sudhir (29044) Parvati (29055) Sharat (29065) Institute of Rural Management, Anand, Gujarat

If you limit your choices only to what seems possible or reasonable, you disconnect yourself from what you truly want, and all that is left is a compromise

Kurlon Ltd

Kurlon Ltd. – Year end review

5 Cs

Company • KCPL – established in 1962 • To manufacture accessory products for the purpose of relaxing and sleeping • Initial mfgtd – Cushion seats and bare blocks made of polyurethane for automobile sector • Introduced the concept of rubberized coir • 1965 – Mattress under the brand name ‘Kurlon’

Company • 1985 – capacity to produce 800 tonnes of rubberized coir (60% was being sold as bare blocks) • 1987 – Stopped its line of bare blocks • By 90s – Product Portfolio: mattresses, pillows, towels, doormats, bolsters and cushion seats (wide range) • Leader in Indian Comfort mattress • Export – 10% of total mattress sale

Context

Context: Current scenario of mattress market • Currently, market is facing a decline • Market in foreign countries also getting saturated • Consumers in these markets moving towards foam or spring-based mattresses

Competition

Competition • Major Players - PU Foam Mattress ( 5 %) – Sleepwell – MM Foam – Major Player - spring mattress segment (1 %) Springwel

Kurlon vs Comp • Opportunities – Brand Awareness (TOM) – Perceived Quality ( Durability) – Proprietary Assets (Name) – Strong Brand Name

• Threats – Brand Loyalty (Commitment) – Perceived Quality (Fit & Finish) – Price (6.7)

• Closest Competitor - Duroflex

Collaborators • Dealers - After advt. the next most important source of information and influencer • Low Spend of Kurlon on Trade Promotion – traders ‘push’ competitor’s products • E.g – Finally I ended up buying another brand with some help from the retailer

Profit and loss account for 2001 and 2002         3/31/2002% Income     Sales 1165.68  Other Income 8.31    1173.99  Expenditure     Cost of sales including   selling and admn expenses   Raw materials 549.26 Manufacturing expenses 61.99 Wages and salaries 39.28 Transport 102.05 Commision on sales 82.54 sales promotion 13.36 Advertising 40.97 Other expenses 165.96 Total 1055.41  Bank and other interests 49.07  Depreciation 22.89 

Total Prior year item PBT Less: Provision for tax PAT

1127.37  -2.58  44.04  10.5  33.54 

(Rs. Million)   3/31/2001%     1126.38   6.47  1132.85        48.7% 5.5% 3.5% 9.1% 7.3% 1.2% 3.6% 14.7%

  533.05 46.17 37.39 99.03 75.31 19.49 43.2 196.17 1049.81  55.87  22.36  1128.04  6.84  11.65  1.3  10.35 

47.3% 4.1% 3.3% 8.8% 6.7% 1.7% 3.8% 17.4%

Target Segment • Normal buyers – involved in replacement purchase or purchase for marriage and addition to family • Therapeutic buyers – purchase mattresses on account of back problems

Normal Buyers • Income level of Rs. 15,000 per month • Purchase a good mattress for the ‘comfort’ factor • Economy segment considers price to be an important factor – Apsara sales volume: price of apsara mattress should be in tune with competitors’ prices • Comfort segment – can be divided into: – Those who seek only comfort, no matter at what price

Therapeutic Buyers • Purchases constitute mostly single beds to prevent • Sub brand target is Ortho • Pricing can be modified so as to associate better quality with higher price • Dealers need to be informed of the various ailments

Product Line • Apsara – Economy model (3 & 4 inches) • Super Deluxe – Premium model (3 & 4 inches) • Romantique – Super soft model (4.5 inches) • Klassic – Super premium model (5 inches) • Ortho – Designed for back problems (4 inches)

Category sub-brand-wise performance in 2003   No of models

Apsar Super Klassi Romantiq a Deluxe c Ortho ue Total 25

28

15

10

Sales (Rs. 342.0 222.4 175.1 Million) 1 145.01 8 3 PBT (Rs. Million)

2.9

0.91 1.86

1.22

16

94

1080. 196.27 9 1.33 8.22

Brand Equity Kurlon Restole Starlite Aaram x Do I know 61.66 31.66 50 50.66 about it?

Centua ry 50.33

Durofle x 54.33

Does it offer me somethin g? Can it

69.2

58.8

69

59.8

64.4

70

60

48

67

56

60

65

75,85

58,60

68,65

62,59

62,68

65,70

65

35

43

50

47

52

deliver? Uniquene ss (Reliabilit y, Nothing durability else )beats it

*Kurlon has a very low score on Fit n Finish as compared to its

Trend Ownership and Preference of Household for Mattresses*

Status Ownership Preference for next purchase % change

Cotton Mattress

Rubberiz Full PU Spring ed Coir Foam Mattress 80 90 20 10

30 -62.50%

120 33.33%

*No of Households Totalling 200

30 50.00%

20 100.00%

Major Issues • High no. of variation under its brand name – Adds confusion

• Ineffective Sales Promotion Strategy – Reallocate funds’

• National vs Regional brands – Strong Comp from regional brands

• Segmentation – Using all segment variables

• Targeting • Positioning (Pure Sleep nothing else) – towels, doormats • Price • Place – Most sales from south – Foreign sales stagnating

Probable Solution • Current Market – Increase Dealer Promotion – Launch Spring & PU (70 mil) mattress export – Create its own retail chain – Create a website for direct user interface – Special Mattress to cater to the health segment

• New Market – Reduce Price of Apsara (Rs 342 mil now out of Rs 1080 mil) would help go into a new segment of lower-middle income group – Introduce PU for rural market

End Contact – [email protected]